As you are well aware, for the last several weeks we have been experiencing enormous volatility in the markets and unprecedented challenges to the financial and credit markets. Since extraordinary times call for extraordinary measures, we are issuing this interim letter to each of you who has entrusted us with your money to manage.

First Affirmative has in excess of 5,000 clients, referred to us by over 100 advisers around the country. Our policy has always been that we work through your trusted advisors, and that our primary job is to support their businesses. Thus, our normal process is to provide information to advisors for their use in communicating with their clients. In addition, we share with our advisers the information we receive from the many mutual funds and separate account managers with whom we work. We do our best to keep your advisor informed, so that he or she can better communicate with you.

A major challenge has been the fact that the current situation is changing almost daily. In little over a month we have seen major financial institutions taken over by the government or merged out of existence. Who would have imagined that the Dow Jones Index would be making daily swings of 300 to 500 points based on speculation that a market bail-out bill would or wouldn't pass? Mutual funds trade after the close of the market. Had we made a decision on September 29th to sell (which we would not have done), we would simply have entwined our clients in a 770 point drop, most of which happened in the last 90 minutes of the trading day-AFTER the time many advisors would have submitted their mutual fund trades for the day. Those clients would then have missed the next day's nearly 500 point recovery.

There are a few basics that do matter to our clients, as opposed to the welter of financial jargon in the media like "uptick rules" or "mark to market" or "short sales" which have no real meaning or application to the average investor. Charles Schwab & Company and FOLIOfn, our custodian broker-dealers, are in solid financial condition, as is First Affirmative itself. Brokerage accounts at both custodian firms are covered by insurance against fraud or failure (but not market losses) by the Securities Investors Protection Corporation (SIPC) for up to $500,000 per account, and both custodian firms carry excess liability insurance in addition to the SIPC insurance. The great majority of cash in brokerage accounts at both firms is held in FDIC insured cash deposits, and we have no exposure to the money market fund that "broke the buck" and went below one dollar in value. The Investment Committee at First Affirmative pays careful attention to these types of investor protection issues.

As CEO of First Affirmative, and a financial planner myself for 22 years, I firmly believe that a financial plan and investment policy are developed in particular to help guide clients during difficult times. Thus, your plan may require rebalancing your portfolio back to the target level of domestic stocks, international stocks, bonds, and cash, causing you to "buy low and sell high."

Finally, I caution you not to confuse the motivations of the traders on Wall Street, who have precipitated the recent violent swings in the markets, with the tens of millions of individual investors who continue to take the long-term view. As I said to our advisers in a post about a week ago, the people who get hurt on a roller-coaster are the ones who jump off before the ride is finished. The current ride, as frightful as it is, is not finished. As concerned as we may be about Congress and the potential for bailout legislation, we still have hope that they will hammer out a compromise agreement that will address our problems and will send a message to the markets around the world that they can still have confidence in our markets, our currency, our government, and our people.

In the meantime, it is your advisor who knows your financial situation the best. It is he or she who can best understand your risk tolerance and the options before you. It is your advisor who has the best access to your tax situation. It is your advisor who can best communicate with us if or when your situation changes, requiring a change in your investment portfolio. We are confident that our clients have well diversified portfolios of good quality mutual funds or individual securities selected based in consonance with a financial and investment plan developed jointly by our staff, your advisor and you. We, in Colorado Springs, cannot determine whether those plans are still appropriate for you today-only you and your advisor can determine that.

We are always interested in hearing how First Affirmative might better serve you and all of our other clients. I and my team will work continually to develop new and improved ways to share information.